Higher Education Plan Sponsors Turning to Advisers for Help

The use of consultants and advisers by retirement plan sponsors in the higher education market has almost tripled since 2010, with 90% of respondents to a survey by Cammack Retirement Group utilizing some type of adviser.

Michael
Volo, senior partner with Cammack Retirement Group in Wellesley, Massachusetts,
tells PLANADVISER he thinks this is one of the reasons higher education plan
sponsors are more focused on fees, simplifying plan administration and engaging
participants (see “Higher Education Plan Sponsors Step Up Their Game”). Fifty-nine percent of institutions polled for the fourth edition
of the Higher Education Retirement Plan Survey report using a consultant, half
use an attorney and 38% use a registered investment adviser to help them with
running their plans.

The
biggest reasons for hiring an adviser, cited by respondents, were heightened
fiduciary concerns and changes in the legal/regulatory environment (each
selected by 73% of respondents). Two-thirds (65%) of respondents say they meet
with their advisers quarterly, and 44% of respondents said their adviser acts
as a plan fiduciary, up from 25% in 2010.

While
higher education institutions are adopting many industry best practices, the
survey uncovered areas in which they could improve, such as increasing
voluntary plan participation and limiting loan usage by participants. In
addition, investment policy statements (IPS) are utilized by only 60% of
fiduciary committees.

Eighty-four
percent of respondents said a key initiative in the upcoming year will be to
improve employee education. Other key initiatives for the upcoming year cited
by respondents included changing the number of investment options in their
plans (42%), creating an IPS (33%), and establishing a fiduciary due diligence
process (24%).

“What
we’ve seen through the survey and working with academic and research
institutions, is there’s a level of complexity and difference in the higher
education 403(b) market that should be recognized and understood. It is very
different from 401(k)s,” Volo notes.

He says Cammack only
provides the complete survey results to survey participants.